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Tuesday, May 12, 2015

Enel annual report 2014

The Italian energy provider Enel arrived some time ago with their annual report. Here I will try to make a summary of what was in that report.

For the report in full please go here and to take a look at my previous summary please click on Enel report Q3 2014 and to find out more regarding the company then please visit my previous analysis of Enel 2014 however... the new analysis will arrive tomorrow.

First we take a look at the income statement as it is below. The blue column s 2014 and the white is 2013. We see that the revenue has made a little drop but in my opinion not very dramatic. We also see that they have managed to decrease their costs so things could have been fine but then something jumps out and that is the Depreciation, amortization and impairment costs (8,d) which are 6 billion € higher compared to in 2013. Due to this the net income is barely half a billion for us poor shareholder which is bad. A dividend of 0.14 € were proposed which is 0.01 € more than last year.

When things stick out I look deeper on that so I directly jumped into the notes to 8,d to see what was going on and that we can see below. The depreciation was pretty flat on 4.5 billion and the amortization was flat around 0.5 billion so the issue arrived with the impairment costs. Two point are the major issues here. Property plant and equipment which had to do with decreasing the value of thermal plants in Italy due to the hard times. The second one has to do with that they want to sell off a daughter in Slovenia and the price they have been offered for it is 2.8 billion € lower than what it is accounted for in the books. I for one hope that they will get a better offer so that the full 2.8 billion € will not be realised in the end.

Conclusion: I hope that this was a final round of impairment costs because without that kind of rubbish appearing in the books then Enel could start to look better! They are still eating off of their old earnings and I hope that this will stop soon. I will remains shareholder in Enel hoping for a better economy in Italy with higher electricity prises to follow that improvement.